Moody's Investors Service assigned a Baa2 rating to Williams Companies $2.4 billion in aggregate credit facilities, consisting of a $1.7 billion 364-day credit agreement. Mihoko Manabe, v.p. and senior credit officer, says one of the company's biggest strengths is its diversity. Gas pipelines run throughout the U.S. and even internationally. "By being diversified, a company is less exposed to one market. Some reserve basins are more mature than others," she explained, adding that the company's most profitable pipelines are in the Southeast and West. "They have a lot of growth in the Southeast and a single long-haul pipeline running up the eastern seaboard," she said.
Another strength for the company is its acquisitive nature. Manabe says the business has recently focused its expansion in the West, namely Nevada and Utah "where there's a lot of growth potential." The company also has a few small international acquisitions. The largest upcoming target is Barrett Resources Group. "They're very attractive because Barrett owns gas reserves in Wyoming and does everything from new drilling to providing gas supplies. It's a good opportunity for marketing," Manabe said.
However, the rating assignment does reflect the company's high leverage. "They're exposed to the California power market, and there's business risk in growth. Their cash flows are generated from unregulated businesses," Manabe noted. Williams is a diversified energy company based in Tulsa, Okla.